Correlation Between Heartland Express and Compass Diversified

Can any of the company-specific risk be diversified away by investing in both Heartland Express and Compass Diversified at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Heartland Express and Compass Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Heartland Express and Compass Diversified Holdings, you can compare the effects of market volatilities on Heartland Express and Compass Diversified and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Heartland Express with a short position of Compass Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Express and Compass Diversified.

Diversification Opportunities for Heartland Express and Compass Diversified

0.09

Correlation Coefficient

Heartland Express  Compass Diversified

Significant diversification

The 3 months correlation between Heartland and Compass is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Express and Compass Diversified Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Diversified and Heartland Express is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Heartland Express are associated (or correlated) with Compass Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Diversified has no effect on the direction of Heartland Express i.e., Heartland Express and Compass Diversified go up and down completely randomly.

Pair Corralation between Heartland Express and Compass Diversified

Given the investment horizon of 90 days Heartland Express is expected to generate 4.35 times less return on investment than Compass Diversified. But when comparing it to its historical volatility, Heartland Express is 1.64 times less risky than Compass Diversified. It trades about 0.03 of its potential returns per unit of risk. Compass Diversified Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  639.00  in Compass Diversified Holdings on July 31, 2025 and sell it today you would earn a total of  92.00  from holding Compass Diversified Holdings or generate 14.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Heartland Express  vs.  Compass Diversified Holdings

Heartland Express

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Heartland Express are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Heartland Express is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Compass Diversified

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Compass Diversified Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Compass Diversified demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heartland Express and Compass Diversified

The main advantage of trading using opposite Heartland Express and Compass Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Express position performs unexpectedly, Compass Diversified can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Compass Diversified will offset losses from the drop in Compass Diversified's long position.

The idea behind Heartland Express and Compass Diversified Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.